Money is a passport to enjoy a more comfortable and easy life. That’s why it pays to know how to manage the money better. According to Susan Beachem, the co-author of the book “O.M.G.: Official Money Guide for Teenagers”, the problems for most people in their early 20s is that money is abstract for them. And it will get increasingly abstract or confusing if they don’t learn the skills in this stage of their lives to manage money better.
Most young people tend to squander money without realizing the real value of money. When you are young there it’s normal to think that managing money is not important, and that you will have plenty of time to save for retirement or emergency fund later. However the fact is the longer you wait to save, the more difficult it will be for you to build adequate savings for your future.
By saving just £500 per month when you are 20, you can grow your savings to more than £60,000 by the time you reach your 30th birthday, about £200,000 by the time of you retirement. Every penny counts when it comes to growing your wealth, and it’s never too early to start saving. Below are some of the tips that young teens can help them become money-wise and spend thrift.
1. Make the word ‘No’ Your Friend
When it comes to managing money smartly, you should learn to say no a lot. Whether it comes to daily night outs with your friends, or being tempted to splurge large amount money on unnecessary luxuries, the more you say no to others and yourself the better it will be for your financial health. Although having fun once in a while is fine, spending too much money on unnecessary expenses will make it difficult for you to save money.
2. Plant the Tree Today to Bear Fruit Later
You must plant a tree today to bear the fruit later. The tree here refers to capital investments while the fruit refers to income. You should consider learning about investing a portion (about 10%) of your income in capital funds.
By the power of compounding your invested amount may grow into a large sum in a matter of years. The earlier you learn to invest, the greater will be the chance of you becoming a successful investor later in life.
3. Avoid Getting Caught in a Debt Trap
Credit card and loans may seem like ‘easy money’, but it can easily lead you to your ruin. If you are not careful in handling loans you call fall into a big, deep debt hole coming out of which will be not only difficulty but in some cases impossible. Try to limit use of loans for important expenses such as emergency repairs, buying a house, or paying of the tuition fees. Even in this case avoid taking out too much loan that you will find hard to repay when due.
Unless you live in a cave, or a remote jungle, money is the most important commodity in life. When managed well it can make your life on earth a paradise. However, if you are not careful about how you spend the money, it can also make your life a living hell.